Lisbon

Lisbon offices register record take-up of 233 000 m² in 2008

Jones Lang LaSalle has disclosed the main conclusions of its most recent “Lisbon Office Overview”, which outlines the indicators from the Lisbon office market in the 4th quarter of 2008 and throughout the year. According to the company, the market registered a record take-up in 2008, with 233 046 m² of area occupied. The Portuguese State was the main occupier thanks to the renting of the entire Office Park Expo (Parque das Nações) for the installation of the Cidade Judicial (approximately 65 000 m²).

Mariana Seabra, Head of Office Agency at Jones Lang LaSalle Portugal, stated: “The year 2008 was, indeed, the best year of the last decade for the Lisbon office market, achieving a take-up never before registered, driven by dynamic demand and a high-quality supply. However, the results obtained in the 4th quarter suggest a slowdown in activity, mainly because of the economic climate and the low confidence of companies, which began to delay or even postpone their decisions as regards occupation of new office space. The year 2009 is likely to register less dynamic results, although occupation volumes can remain at the annual average over the past decade, which is around 150 000 m².”

In 2008 as a whole, zone 5 (Parque das Nações) and zone 6 (West Corridor) were the zones that most contributed to the take-up registered in the market, accounting for 85 474 m² and 62 249 m² respectively. Next on the list was zone 3 (New Office Zone), zone 1 (Prime CBD) and zone 2 (CBD), which accounted respectively for 12.4%, 9.8% and 7.9% of the total take-up. Even so, the last two zones registered a fall in take-up levels in comparison to the previous year, with annual reductions of 36.5% and 31.2%, respectively, in the GLA rented. In contrast, zone 4 (Secondary Zone) presented an annual performance in 2008 62% up on the previous year, albeit only accounting for 5.4% of the total occupied by the market in the year.

As for the quarterly performance, the report relates how in the last three months of the year the first signs of the difficulties in the economy came to the fore. The take-up in this period was 23 765 m², which was about half the area occupied in equal periods in 2007 and 2006. Historically, the last quarter of the year is the most dynamic in terms of office occupation, but this did not happen in 2008, when this period of the year actually returned the poorest performance (only 10.2% of the annual total, compared to 14.6% in the 1st quarter, 29.9% in the 2nd and 45.3% in the 3rd).

The good results of the market and the caution in launching new office projects are reflected in the vacancy rate, which fell 0.33 percentage points to 6.9% in 2008 in relation to the previous year, translating into a supply available of 298 134 m². Only zone 6 and zone 5 achieved vacancy rates above the market average – 16.97% and 12.92% respectively. At the end of 2008, the total stock of Lisbon offices rose to 4 290 578 m², of which 94 500 m² was part of the new supply put onto the market throughout the year. In the two-year period of 2009-2010 the new supply is likely to continue to be slow owing to the prudence shown by developers. It is forecast that 13 projects will come onto the market, totalling 127 964 m² of GLA.

According to Mariana Seabra, “the structure of the future supply in the Lisbon market will be different depending on the zone. While on the one hand we will continue to witness development of new projects built from scratch in the main expansion zones of the market, on the other hand, in zones such as zone 1 and zone 2 – in the city centre – refurbishment is the only solution to provide new supply, responding to a demand that is not matched by the scarcity of the product. In overall terms, zones 5, 6 and 3 will experience the greatest expansion of future supply, in contrast to the other zones in which the supply continues to be scarce and which therefore will be ignored and supplanted by secondary locations that provide prime products.”